Retail sales systems must provide convenience for the customer and efficiency for the retailer. Credit and debit cards provide retailers with one mechanism for increasing the efficiency of retail sales systems, while providing a level of convenience to consumers. Indeed, credit card and debit card transactions are ubiquitous, with a variety of retail equipment providing such capability. A given retailer or merchant is effectively obligated to provide credit transaction capability because it is so widely expected. Currently, banks provide virtually all non-proprietary credit/debit sales—(Visa, MasterCard, AMEX, etc.). These banks typically charge from 3% to 6% to float the billing amount for a given transaction through a billing cycle—typically three to four weeks. These costs are borne directly by the merchants and indirectly by the consumers, and provide a significant revenue stream for the banks or credit card companies. Indeed, American consumers charged billions of dollars last year, and when international credit transactions are considered, the total amount of credit charges is staggering.
However, conventional charge transactions do not necessarily provide the greatest convenience and security to consumers, nor do they provide retailers with the greatest efficiency. Credit card transactions themselves are subject to fraudulent charging activity because, conventionally, they do not require specific identification information from the individual using the charge card. As a consequence, someone other than the authorized account holder could use the charge card. This is particularly true in automated transaction systems, such as are commonly found at fueling stations, pay phones, and vending systems. In such environments, transaction authorization is based on receipt of valid information from a credit card associated with an active charge account. Provided the automated retail system can verify credit authorization, as is typically done by contacting a credit authorization network, the transaction will be authorized without benefit of specifically identifying the person using the charge card.
Debit card transactions, although similar to credit card transactions, typically require the customer to enter a PIN associated with the authorized account. Further, a debit card is more typically associated with a bank account such as a checking account rather than with a charge account. Ideally, only the authorized account holder knows the PIN corresponding to the account. When a debit-card holder attempts to conduct a transaction with their debit card, they are required to enter the correct PIN before the transaction can be authorized. Clearly, unless the privacy of the PIN has been compromised, this provides an additional level of security not commonly found with pure credit card transactions. However, usage of a PIN can place additional burdens on the merchant because the complexity and expense of the equipment required to input and process PINs can be prohibitive. Indeed, European debit card transactions must be supported by bank-authorized PIN processing hardware. Such hardware carries significant expense and may be impractical for installation in vending or retail systems associated with low-cost or low-margin products and services.
A growing number of customers own cellular telephones and, in particular, own digital cellular telephones. Digital cellular telephones are distinguished from their earlier generation analog counterparts in a number of ways. One significant distinction of the newer digital cellular phones is their intrinsic communications security. Signaling between a digital cellular phone and its corresponding cellular network is based on digitally encrypted communications that are substantially more difficult to intercept and decipher than the signaling schemes used in earlier analog phones. As such, these digital cellular phones are suitable for use in transaction processing, wherein a customer may transmit certain information, including their PIN, to effect a given retail transaction. Further, using a customer's digital cellular telephone as an integral part of a retail transaction system is consistent with the desire to provide customers with ever more convenient retail transactions. Indeed, developing generations of cellular telephones incorporate more and more functionality for their owners and will likely come to serve as all-in-one communication devices.
Accordingly, there is a need to provide retail systems capable of communicating certain transaction information to a cellular network for the purpose of obtaining transaction authorization, with such information sent through a customer cellular telephone. Ideally, the retail system would additionally have the capability of receiving authorization information from the cellular network through a second cellular link apart from the customer's cellular phone. This second cellular link would also allow the retail system to complete the transaction by sending transaction amount information back to the cellular network for billing against the customer's cellular phone account.